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Craig Harris
The Arizona Republic
Oct. 27, 2004 12:00 AM
In the bizarre world of baseball economics, the Diamondbacks set a franchise record for most losses in a season yet did better financially than any year except their inaugural season, when the team made its only profit.
Team officials in interviews Tuesday said the Diamondbacks, who lost a franchise record 111 games, were projected this year to lose about $8 million - down from $42 million in 2003. Much of the reduction came from a smaller payroll and revenue-sharing money from baseball.
While the losses are still large, the reduction of red ink is expected to help further stabilize the franchise's finances and put the Diamondbacks in a better position to sign some marquee players, such as Richie Sexson, who is currently negotiating with the team, Diamondbacks officials said. Cutting the losses also could help the team refinance prior debt, giving the franchise more cash for future payrolls, a team owner said.
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"We want to show that good financial stewardship can work," said Ken Kendrick, one of the team's general partners.
The team also provided good news to most of its 22,000 season ticket holders by saying it would not raise prices, except for around 700 club seats near home plate, for next season.
Those seats will increase to $100 a game from $82.50, but those fans will also receive valet parking, and the seats will be padded.
Prices for single-game tickets, which go on sale in the spring, have not been determined.
"They will stay darn close to flat," Rich Dozer, team president, said of single-game tickets. "We might tinker with prices for weekend or premier games."
Reducing operating losses, combined with investors pumping in more cash, could help the team refinance much of the $165 million owed to 15 players - 13 of whom are no longer under contract - in deferred salaries, Kendrick said.
The only players currently under contract who are receiving deferred payments are pitcher Randy Johnson and outfielder Luis Gonzalez.
Under former Chief Executive Officer Jerry Colangelo, the Diamondbacks used deferred contracts to sign star players, who produced a 2001 World Series championship and three division titles.
Yet, the financial maneuvering nearly bankrupted the franchise, and the team has been forced to trade some of those high-priced stars to cut payroll.
Differences over the team's finances caused the team's four general partners, including Kendrick, to oust Colangelo in August.
Getting a long-term loan for the deferred salaries would provide the team with additional cash flow, said Kendrick, a Valley businessman who made his fortune in banking and software.
The move would be much like a consumer refinancing a house to lower payments.
Kendrick said the team is becoming more attractive to lenders because of the long-term, $160 million commitment he and his three partners have made and the $99 million investment campaign begun this year with new investors.
Those pledges bring in about $26 million a year.
If the team were unable to refinance the debt with a long-term loan, the Diamondbacks would be paying roughly $24 million a year in deferred salaries for each of the next seven years.
This season, the team spent $28 million for deferred salaries, and it had a $77 million payroll, according to Kendrick.
Last year's payroll was about $99 million.
Next season's payroll has not been determined, and it could hinge largely on whether the team re-signs Sexson or trades Johnson, who is set to make $16 million.
Craig Harris
The Arizona Republic
Oct. 27, 2004 12:00 AM
In the bizarre world of baseball economics, the Diamondbacks set a franchise record for most losses in a season yet did better financially than any year except their inaugural season, when the team made its only profit.
Team officials in interviews Tuesday said the Diamondbacks, who lost a franchise record 111 games, were projected this year to lose about $8 million - down from $42 million in 2003. Much of the reduction came from a smaller payroll and revenue-sharing money from baseball.
While the losses are still large, the reduction of red ink is expected to help further stabilize the franchise's finances and put the Diamondbacks in a better position to sign some marquee players, such as Richie Sexson, who is currently negotiating with the team, Diamondbacks officials said. Cutting the losses also could help the team refinance prior debt, giving the franchise more cash for future payrolls, a team owner said.
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"We want to show that good financial stewardship can work," said Ken Kendrick, one of the team's general partners.
The team also provided good news to most of its 22,000 season ticket holders by saying it would not raise prices, except for around 700 club seats near home plate, for next season.
Those seats will increase to $100 a game from $82.50, but those fans will also receive valet parking, and the seats will be padded.
Prices for single-game tickets, which go on sale in the spring, have not been determined.
"They will stay darn close to flat," Rich Dozer, team president, said of single-game tickets. "We might tinker with prices for weekend or premier games."
Reducing operating losses, combined with investors pumping in more cash, could help the team refinance much of the $165 million owed to 15 players - 13 of whom are no longer under contract - in deferred salaries, Kendrick said.
The only players currently under contract who are receiving deferred payments are pitcher Randy Johnson and outfielder Luis Gonzalez.
Under former Chief Executive Officer Jerry Colangelo, the Diamondbacks used deferred contracts to sign star players, who produced a 2001 World Series championship and three division titles.
Yet, the financial maneuvering nearly bankrupted the franchise, and the team has been forced to trade some of those high-priced stars to cut payroll.
Differences over the team's finances caused the team's four general partners, including Kendrick, to oust Colangelo in August.
Getting a long-term loan for the deferred salaries would provide the team with additional cash flow, said Kendrick, a Valley businessman who made his fortune in banking and software.
The move would be much like a consumer refinancing a house to lower payments.
Kendrick said the team is becoming more attractive to lenders because of the long-term, $160 million commitment he and his three partners have made and the $99 million investment campaign begun this year with new investors.
Those pledges bring in about $26 million a year.
If the team were unable to refinance the debt with a long-term loan, the Diamondbacks would be paying roughly $24 million a year in deferred salaries for each of the next seven years.
This season, the team spent $28 million for deferred salaries, and it had a $77 million payroll, according to Kendrick.
Last year's payroll was about $99 million.
Next season's payroll has not been determined, and it could hinge largely on whether the team re-signs Sexson or trades Johnson, who is set to make $16 million.
